The new GAME plan

They say it’s the first 90 days of any new business or job that really tests its leader.

Coincidentally, when GAME detailed its interim financials last week, it was 90 days exactly since new CEO Ian Shepherd stepped in to replace Lisa Morgan, who left in April.

So talk about thrown in at the deep end – no sooner had Shepherd started and GAME was already in pre-results lock down.

And understandably so: the results weren’t brilliant. In the UK and Ireland, total sales were down by 17.8 per cent and like for like sales were down by 16.2 per cent – but nevertheless in line with the market shrinkage.

For the half-year to July 31st the Group’s revenue was down 9.6 per cent to £624.6m compared to £690.8m the year previously, with like for like sales down 10 per cent.

So while GAME isn’t failing, it has borne the brunt of the market’s very mixed, changeable fortunes.

A RATIONAL APPROACH

Before Shepherd was appointed, GAME’s interim CEO and chairman had excitable, high-level ideas of the digital transformation and embracing online that would see the firm into the future.

Now his feet are under the table, Shepherd’s plan to regroup the firm and forge on might not sound as excited, but is much more practical, more sensible.

“For me coming in as CEO the question is: what’s next? What’s the direction of travel? What are our untapped opportunities and the potentials for us to unlock?”

He says there are two key areas.

“The first is customer loyalty and customer relations management – specifically the Reward Card business. We have 15m Reward Card customers in the territories in which we operate.

“Take a step back from our industry and you see that’s a database the same size as the Tesco Clubcard, as the Boots Advantage card. That’s an asset bigger than most other retailers – and certainly way beyond what many specialists have access to.

“The challenge for us now is how to build that customer base for more granular marketing, more one-to-one marketing and more talented offers for people to really increase your share of their spend and draw them back in and buy new content. The size of opportunity there is really significant.”

The second area, he says, is to evolve GAME and Gamestation into ‘multi-channel’ operations.

“Our market share across the group online is much lower than bricks and mortar, but it doesn’t have to be that way.”

But multi-channel doesn’t just mean growing the websites and hoping for the best. “We want to bring online and retail together – use the best of the web in-store and use the site as a driver for in-store physical sales. The growth we can unlock from that is significant.”

THE TRANSITION

Shepherd doesn’t want to go on record about exactly how this physical/online hybrid model works.

It’s easy to imagine the kind of initiatives, however you don’t even have to do that. The most recent edicts from chairman Peter Lewis to shareholders talks of “changes to the look and feel of our stores, including more interactive product demonstrations and additional products”.

Shepherd will offer some further details: “Going on our current strengths – the expert people in our stores and strong supplier relationships – and augmenting that with a strong multi-channel approach and strong CRM takes us down the road of looking at how the in-store experience and technology in-store changes.”

GAME and Gamestation, he adds, still have a job to do as specialists on the High Street – the increasing depth of what games can offer demands the right kind of independent advice for consumers, after all.

“We are making sure the experience we offer delivers on the promise of being a specialist.

“We have a number of current strengths that are immensely powerful – foremost is our people in the stores, they are very passionate and we always get great feedback about the store managers and staff being very passionate and knowledgeable. That’s a great position from which to start.”

HEAVY LIFTING

Shepherd doesn’t get touchy-feely for too long. He credits GAME’s “rigorous focus on costs and cash” that has meant savings on operational costs and savings, real improvements from a cash flow point of view.

“If you’re in a tough market you have to be very agile fiscally, and I think we have done that well,” Shepherd says.

Plus there’s that recently-finalised reorganisation of the commercial team still to announce, and a number of nitty-gritty behind-the-scenes things which have gone on to help improve GAME.

There’s been, Shepherd says, “a lot of heavy lifting” for the unsexy, but important stuff. Investment in IT capabilities, which means “replatforming our reward card” and “rebuilding the underpinning of our web and in-store sales”.

Hardly stuff that makes the front page on its own – but important steps for GAME’s health.

“When you put that all together we are very well prepared with a lot more capability going into 2011 – that will help us unlock a lot of the underappreciated aspects of the business. We will certainly arrive next year in these particular circumstances just as the hard work comes to fruition and we will bring to market a lot of very commercial ideas.”

BRIGHT FUTURE

So, no bold proclamations. But not bad for just 90 days work.

Previously, Shepherd was responsible for Vodafone’s retail redesign and, as UK commercial director, led a division with over £3bn in revenue.

His responsibility there covered 400 stores and 2,000 staff, the product and brand marketing teams, plus online sales and mobile web. He knows what he’s doing.And he’s keen to talk sense about the market, acknowledging the challenges, but nevertheless optimistic.

Certainly, the mood at GAME Group’s annual Gamefest conference for staff two weeks ago was steely and determined, but still full of energy.

Adds Shepherd: “When you look at the results we have published they tell you important things. Firstly the context of a really difficult, challenged market. In terms of its shape, coming down from 2008, driven by the DS and Wii, moving into shrinkage in 2009 and then 2010… we’ve seen it fall, yes. The market is down 17 per cent year on year – it’s lost almost a fifth of its size.

“We have gained market share in every territory we operate in – there was a lot of commercial action that went into making sure that happened. If you’re going to be in a market that’s declining you may as well grow your market share. We have done that well.

“But there are lots of positives for GAME Group – and the games market is still big and vibrant, even now.”

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MCV is the leading trade news and community site for all professionals working within the UK and international video games market. It reaches everyone from store manager to CEO, covering the entire industry. MCV is published by NewBay Media, which specialises in entertainment, leisure and technology markets.